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Asia: Markets mostly down after Wall St losses, China report

[HONG KONG] Asian markets mostly fell on Friday following more downbeat Chinese data and another sell-off on Wall Street while the dollar edged up ahead of an expected US interest rate rise.

Gold prices extended losses as commodity prices are hurt by the stronger dollar but oil recovered slightly from Thursday's dips, although a global supply glut is expected to keep a lid on any strong gains.

Selling was increased by news that a closely watched gauge of Chinese manufacturing activity had tumbled in July, adding to concerns about the mainland economy.

Tokyo shed 0.67 per cent, or 139.42 points, to end at 20,544.53, Sydney fell 0.43 per cent, or 24.2 points, to close at 5,566.1 and Seoul was 0.93 per cent lower, giving up 19.11 points to 2,045.96.

Hong Kong fell 1.06 per cent, or 270.34 points to 25,128.51 and Shanghai reversed morning gains to fall 1.29 per cent, or 53.01 points, to 4,070.91. Shanghai's losses follow a six-day rally that came in response to government measures to protect the market after a month-long plunge.

US traders retreated for a third straight session Thursday in response to more soft reports, with American Express, Caterpillar and 3M all disappointing.

The below-par results follow similarly downbeat posts from Apple, Microsoft and United Technologies this week, which have fuelled fears about this quarter's earnings.

The Dow fell 0.67 per cent, the S&P 500 dropped 0.57 per cent and the Nasdaq gave up 0.49 per cent.

Company profits have been pressured by a strengthening of the dollar as the Federal Reserve prepares to hike rates, with bank chief Janet Yellen last week saying she saw a move before the year's end.

In Tokyo Friday, the dollar was at 123.95 yen, up from 123.90 yen in New York.

The euro edged up to US$1.0948 and 135.69 yen from US$1.0985 and 136.10 yen.

"With the US dollar likely to keep rising as the Fed prepares to raise rates, there's still some sort of weakness to come in the commodity space," Angus Gluskie, managing director at White Funds Management in Sydney, told Bloomberg News.

"The earnings outlook in the US is also somewhat subdued as a result of the strong US dollar. We're not likely to see a massive rally in the next few months." Chinese traders came off a six-day rally after the Caixin Purchasing Manager's Index (PMI) of manufacturing came in at a worse-than expected 48.2 this month, the weakest since April 2014. Caixin took over sponsorship of the PMI survey from British banking giant HSBC this month.

The result will deal a blow to hopes about the world's number two economy, which had been given a fillip this month by official figures showing second-quarter growth was better than estimated.

On commodities markets gold is sitting at five-year lows as the expected rate hike sees traders flee from the safer sanctuary of the precious metal in search of better returns.

Bullion fetched US$1,088.64 an ounce compared with US$1,101.86 late Thursday.

Oil rose but continues to be blasted by the strong dollar and worries about a global supply glut.

US benchmark West Texas Intermediate for September delivery was up 30 US cents to US$48.75 - around its lowest levels since March - and Brent crude for September gained 19 US cents to US$55.46 a barrel in morning Asian trade.